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Having Identified Blogger, Hedge Fund Drops Lawsuit

By Matthew Goldstein March 24, 2014 4:21 pmMarch 24, 2014 4:21 pm

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David Einhorn, the hedge fund manager, at the Sohn Investment Conference in New York last year.Credit Brendan McDermid/Reuters

David Einhorn, the hedge fund manager, dropped a lawsuit aimed at unmasking an anonymous blogger on the Seeking Alpha financial website, who had discussed one of his fund’s stock positions before it was publicly announced.

Mr. Einhorn’s Greenlight Capital moved to discontinue the suit at the same time it said it had identified the blogger. In a statement, which did not name the poster, Greenlight said it “has resolved the matter privately to our satisfaction.”

It’s not clear how Greenlight managed to unmask the blogger, who goes by the handle “Valuable Insights,” or what the firm intends to do next.

Colin Lokey, director of contributor success at Seeking Alpha, said the website did not provide Greenlight with the identity of the blogger. He said the website remained committed to protecting the rights of its posters to remain anonymous.

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“Greenlight dropped the suit of its own accord,” said Mr. Lokey. “We did not at any time disclose the author’s identity formally or informally, and at no time were our actions dictated by reaching a deal with Greenlight.”

David Korzenik, a lawyer for Seeking Alpha, also said the site had not struck any deal with Greenlight, adding there was “no disclosure” to the hedge fund.

A New York State Court judge had scheduled a hearing for April 1 on Greenlight’s motion to force Seeking Alpha to divulge the name of the blogger. In February, Greenlight filed the suit, claiming that a Nov. 14 post by Valuable Insights had interfered with the hedge fund’s strategy of buying shares of Micron Technology.

In the lawsuit, the hedge fund argued that only a few people could have known that Greenlight was amassing a big stock position in Micron and that the fund wanted Seeking Alpha to divulge the name of the blogger so it could learn who had leaked the confidential information.

The lawsuit stirred controversy on Wall Street, with some contending it was an infringement of a blogger’s right to free speech, while others argued that Mr. Einhorn had the right to keep his trading strategies secret.

Greenlight had wanted to keep the investment in Micron quiet until at least Nov. 21, when Mr. Einhorn would publicly discuss it at a charity event where prominent money managers were invited to present their “best investment ideas.” To do that, Greenlight filed a request for confidential treatment with the Securities and Exchange Commission, a move that enabled it to delay disclosing the stock position.

In the November blog post, Valuable Insights hinted that a hedge fund manager would soon disclose a large position in Micron. The blogger later confirmed a reader’s guess that the manager was Mr. Einhorn.

A version of this article appears in print on 03/25/2014, on page B5 of the NewYork edition with the headline: Having Identified Blogger, Hedge Fund Drops Lawsuit.